MADISON, Wis. — Filene Research Institute has released a study, Cooperative Comebacks: Resilience in the Face of the Hurricane Katrina Catastrophe, which examines how credit unions fared in the wake of the disaster.
Author Mark Klinedinst, an economics professor at the University of Southern Mississippi, compares the experience of credit unions and banks in southern Mississippi and New Orleans at the aggregate- and case-study levels.
Klinedinst argues that analyzing credit unions under this kind of duress may be useful in identifying cooperative strengths and weaknesses that are not apparent under normal circumstances. These findings may assist credit unions with larger contingency planning as it relates to disaster preparedness, he added.
Although banks and credit unions have generally recovered and even thrived since Katrina struck, the comeback is not evenly distributed, Klinedinst said. He conducted a variety of statistical regressions and discovered that the greatest predictors of institutional recovery are size and location.
Klinedinst also observed that credit unions received significant assistance from other credit unions, nongovernmental local organizations, and national credit union associations. Banks mainly received nongovernmental assistance from other branches of the same institution not impacted by the storm, but not from other banking institutions. The social network of credit unions seems to be at least partially responsible for their recovery, as represented by a 2.3% increase in credit union membership in the affected areas during the period studied, he noted.
“This research is a small but significant contribution to the literature on organizational resilience in the wake of huge external disasters” said Filene Chief Research Officer George Hofheimer. “One of the most practical lessons credit unions can take away from this study has to do with understanding the potential strength of their cooperative structure in the face of wild-card, external events like hurricanes and terrorist attacks.”
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